The International Monetary Fund (IMF) has set 11 fresh conditions for Pakistan to secure the next $1.2 billion tranche, including reforms to procurement rules to end preferential treatment for state-owned enterprises in multi-billion-rupee contracts.
The government also agreed with the IMF to notify semi-annual gas tariff adjustment from July 2026 and annual power tariff adjustment from January 2027, indicating that the government will have to adjust both electricity and gas in the Fiscal Year 2026-27.
Under the new structural benchmark, the government has accepted the IMF condition to enact amendments to the Special Economic Zones (SEZs) and Special Technology Zones (STZs) for legislation to phase out fiscal incentives consistent with the Finance Bill 26 and shift from profit-based to cost-based, discontinue the rights and responsibilities, and abolish all incentives by 2035.
All fiscal incentives given to SEZs under the China-Pakistan Economic Corridor (CPEC) will be abolished by 2035.
The PPRA Rules will be amended by September 2026 after approval of the upcoming budget.
The IMF’s Executive Board is all set to consider approval of the completion of the third review and release of the fourth tranche under the $7 billion Extended Fund Facility (EFF) program next month.
For striking a staff-level agreement for completion of the third review under EFF and the first review under the Resilience Sustainability Facility (RSF), Pakistan agreed with the IMF that the parliamentary approval for the 2026-27 budget would be sought in line with the IMF staff.
It is expected that the IMF mission will visit Islamabad next month in order to finalise the budgetary and fiscal framework with the Ministry of Finance for the upcoming budget.
There is another structural benchmark (SB) agreed with the IMF that the National Accountability Bureau (NAB) Ordinance would be amended to adopt qualification criteria and establish a merit-based and competitive selection process by January 2027.
In order to minimise the tax shortfall of the FBR, it is agreed with the IMF for the issuance of regulations for the selection of audit cases through a centralised mechanism at the FBR.
The FBR has been facing a massive revenue shortfall in the first nine months of the current fiscal year, and the tax machinery is experiencing a challenging task to materialise the revised tax collection target of Rs13.97 trillion by June 30, 2026.
The government also agreed with the IMF on a new condition: the BISP stipend will be increased from Rs14,500 to Rs19,500 from January 2027, so the BISP allocation will be increased in the upcoming 2026-27 budget.
The State Bank of Pakistan (SBP) agreed with the IMF for developing a roadmap for the gradual liberalisation of the foreign exchange regime by the first quarter of 2027.
This indicates that the IMF wants liberalisation of the exchange rate regime by removing any restrictions.
Under the new structural benchmark, the government will establish the Pakistan Regulatory Registry to ensure business regulations for the federal government and the Islamabad Capital Territory (ICT).
